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Comex gold rose to near its highest in a month on Friday, boosted by a weak U.S. labour report that illustrated the fragile state of the economic recovery, likely keeping rates low and the dollar weak for a while.
Employers in May added the fewest number of workers in eight months, and unemployment rate climbed to 9.1 per cent. The Federal Reserve has kept its benchmark interest rate at zero per cent to 0.25 per cent since December 2008 and pledged to buy $600 billion in Treasuries through the end of June to help revive the economy.
Investors use gold as a hedge against political and economic insecurity and inflationary pressure.
Comex gold futures are moving are moving in line with our expectations. As mentioned in the previous update favoured view expects any decline to $1,510-25 to hold well for a rise to new highs above $1,577. Direct rise above $1,551 will now hint at bullishness for $1,577 or even higher towards $1,595.
A gradual rise above $1,577 can be seen in the coming sessions. Supports are at $1,535 followed by $1524 now.
Potential trend channel resistance is at $1,605-10, also a potential target for this present move. Only a fall below $1,510 could revive hopes of a decline towards $1,445 levels again.
Our wave counts are now hinting at a final fifth wave to have begun.
As we have been maintaining there is a possibility of the fifth wave to continue rising higher above $1,577 towards $1,600 levels. Therefore, we have modified our previous wave counts of a possible wave “A” which ended at $1,505. As mentioned in the previous update, a bullish reversal has been confirmed on a daily close above $1,530.
RSI is the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still above the zero line of the indicator, indicating bullishness to be intact.
Therefore, look for gold futures to test the resistance levels.
Supports are at $1,535, $1,524 and $1,510. Resistances are at $1,555, $1,578 and $1,605.
Gnanasekaar T.
(The author is the Director of Commtrendz Research and also in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at >gnanasekar_thiagarajan@yahoo.com. )
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